Agriculture Sector in India

May, 2014

Introduction

India is principally an agricultural country. Agriculture, with its allied sectors, is unquestionably the largest livelihood provider in India. Most of the industries also depend upon the sector for their raw materials. Steady investments in technology development, irrigation infrastructure, emphasis on modern agricultural practices and provision of agricultural credit and subsidies are the major factors contributed to agriculture growth.

Indian agriculture has undergone rapid transformation in the past two decades. The policy of globalisation and liberalisation has opened up new avenues for agricultural modernisation. This has not only lead to commercialisation and diversification, but also triggered various technological and institutional innovations owing to investments from corporate entities.

From a net importing country, India is today consistently producing 250 million tonnes (MT) of food grains, 100 MT of rice, 90 MT of wheat, 35 million bales of cotton, and more than 18 MT of pulses. The growth is facilitated mainly by Krishi Vigyan Kendras (KVK) system which is spread across the country.

Department of Agriculture and Cooperation under the Ministry of Agriculture is the nodal organisation responsible for development of the agriculture sector in India. The organisation is responsible for formulation and implementation of national policies and programmes aimed at achieving rapid agricultural growth through optimum utilisation of land, water, soil and plant resources of the country.

Market Dynamics

The Prime Minister’s Economic Advisory Council (PMEAC) has estimated farm sector growth for current fiscal at 4.8 per cent, more than double from last year’s 1.9 per cent.

India has emerged as a major player in the global agriculture market. In the last five years, the country’s agriculture exports have tripled from around Rs 80,000 crore (US$ 12.75 billion) to Rs 2.32 trillion (US$ 33.99 billion), said Mr Sharad Pawar, Union Minister for Agriculture, Government of India.

Total exports of Indian agri and processed food products from April to August 2013 stood at US$ 9,711.09 million as compared to US$ 8,806.41 million during the same period last year, according to the data released by the Agricultural and Processed Food Products Export Development Authority (APEDA).

India’s tea production rose by 12.59 per cent to 156.70 million kg in September 2013 on account of higher output in southern regions and West Bengal (WB). The output was 144.11 million kg in the same month last year, as per the data released by Tea Board of India.

The Coffee Board of India has estimated coffee consumption in India to be around 125,000 tonnes for 2013, registering a growth of 5-6 per cent annually since 2010.

The foreign direct investment (FDI) inflows in agricultural services and machinery sector during April 2000 to August 2013 stood at US$ 1,629.19 million and US$ 337.35 million respectively, as per the data released by Department of Industrial Policy and Promotion (DIPP).

Major Developments and Investments

The National Bank for Agriculture and Rural development (NABARD) has opened a lending window to private sector for creation of warehouse space and also to set up cold storages and cold chains.

Unique Organics plans to set up an integrated herbal tea processing facility in West Bengal with total outlay estimated at Rs 500 crore (US$ 79.73 million). Further, a mobile application named TRA Tocklai on Android and IOS platforms has also been launched by Tea Research Association (TRA) in India. The application includes all research and development (R&D) work done in the past 100 years.

The Technology Mission on Coconut (TMOC) has cleared 14 projects with an outlay of Rs 19.25 crore (US$ 3.06 million) and a subsidy of Rs 2.86 crore (US$ 456,044.92). Under the project component ‘Processing and Product Diversification’, proposals from 10 coconut processing units have been sanctioned assistance.

Indian Council of Agricultural Research (ICAR) has sought Rs 5,700 crore (US$ 909.18 million) to strengthen KVK in the 12th Five Year Plan. The allocation for KVK was Rs 2,000 crore (US$ 319.02 million) during the 11th Five Year Plan.

Government Initiatives

The government has taken several steps to revitalise agriculture sector and improve the conditions of farming community on sustainable basis by increasing investment, improving farm practices, rural infrastructure, delivery of credit, technology and other inputs. Some of the major initiatives taken by the Government of India include:

The Government of India plans to set up two spice parks at Sitarganj and Sahaspur in Uttrakhand with the help of Spice Board of India, said Mr Anand Sharma, Union Minister for Commerce and Industry, Government of India. It has also opened fifth spice park at Mattupetty Sivaganga in Tamil Nadu (TN) for processing turmeric and chilli

The government has allowed 100 per cent FDI under the automatic route in storage and warehousing including cold storages. 100 per cent FDI is also permitted for development of seeds

The Cabinet Committee on Economic Affairs (CCEA) has approved the implementation of the National Mission on Oilseeds and Oil Palm (NMOOP) during the 12th Plan with financial allocation of Rs 3507 crore (US$ 559.51 million). This would help in enhancing production of oilseeds by 6.58 MT and also bring additional area of 125,000 hectares under oil palm cultivation

The government has launched an initiative to spend US$ 65.1 million to promote 60,000 pulses villages in rain fed areas for increasing crop productivity and strengthening market linkages

The Government of India has set a target of 259 MT of foodgrains production in 2013-14. It is implementing various crop development programmes/ schemes for achieving production targets of various crops

Under the Union Budget 2013-14,

The total outlay of Rs 27,049 crore (US$ 4.31 billion) is proposed for the Ministry of Agriculture. The government has allocated US$ 145.8 billion for agriculture credit, an increase of US$ 26.04 billion compared to FY13

Allocation to the Rashtriya Krishi Vikas Yojana (RKVY) has been increased to US$ 2.1 billion, an increase of about nine per cent from the previous fiscal

National Food Security Mission, a scheme to bridge yields gap of major crops, has been provided US$ 468.7 million

Road Ahead

In order to meet the food grain requirements of the country, the agricultural productivity and its growth needs to be sustained and further improved. The growth target for agriculture in the 12th Plan is estimated to be 4 per cent as compared to 3.6 per cent for the 11th Plan.

By 2016-17, India growing at the rate of seven per cent is expected to reach the workforce demand of about 232 million from 229 million (in 2011-12) in agriculture sector which constitutes 44 per cent of the total workforce of the economy. However, 95 per cent of the workforce requirement is expected to be generated in informal sector more so in agriculture.

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